How will the Internet transform supply chain economics? Research a corporation

1
How will the Internet transform supply chain
economics? Research a corporations approach,
present the case

• A Presentation For INBS 510
• By
• Jenny Ntuk
• Oct 25, 2004

2
Scope of this Presentation

• What is Supply Chain Economics
• Traditional Supply Chain concept
• Supply Chain in the Internet era
• Dell business model
• Dell Internet Supply Chain Structure
• Dell Supply Chain information infrastructure
• Dell Internet Supply Chain as a competitive
  advantage

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What is Supply Chain Economics

• Supply Chain is the flow of materials,
  information, money and services from raw material
  suppliers through factories, warehouses to the
  end customers. It also includes organizations and
  processes that create and deliver products,
  information and services to the end customers.
• Supply Chain Economics involves the management,
  integration and optimization of these flows both
  within and among companies.

Turban, Efraim, King David, Lee, Jae and
Viehland, David. Electronic Commerce A
Managerial Perspective. Prentice Hall 2004 pg.
300
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Supply Chain Economics ? (2)

• Supply Chain Management (SCM) is the process of
  optimizing a companys internal practices as well
  as a companys interaction with its suppliers and
  consumers in order to bring product to market
  more efficiently.
• Supply Chain Integration is the linking of
  suppliers, manufacturers, logistics providers,
  internal distribution centers, distributors,
  wholesalers and all other entities that are
  involved in the production and delivery of goods
  to the final consumer.
• Supply Chain Optimization is the ability to apply
  best practices with leading technology support
  across an entire network with maximum
  effectiveness as measured by all entities in the
  network and particularly the customer.

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Traditional Supply Chain Concept

• Involves linear connections among partners
• In traditional Supply Chain, information is
  treated as a supporting element of a value-added
  process NOT as a source of value itself.

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Internet Driven Supply Chain Concept

• All partners in the supply chain benefits from a
  centralized information source. Here the supply
  chain is driven by true consumer demand, so
  information sharing is critical.

Stanford Global Supply Chain Management Forum
SGSCMF W2 2001 November 2001
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Traditional Versus Internet Driven Supply Chain
Approach ? (1)

• Independent inventory management policies
• Information sharing is limited to current
  transaction and to direct neighbors in the chain.
• Independent information systems

• Channel inventory is managed according to joint
  information forecast on demand. (leading to
  overall channel inventory reduction)
• Real time centralized information is available
  for planning and monitoring.
• Compatible information systems for seamless
  information sharing among partners

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Traditional Versus Internet Driven Supply Chain
Approach ? (2)

• Short term focus due to less reliable forecasting
• Each partner control its own success or failure.
• Consumer driven mass customization is limited.

• Long-term perspective due to more reliable
  collaborative information sharing
• Channel members shares the risks and reward.
• Mass customization and build-to-order is enhanced
  due to real time information sharing.

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A Corporations Approach Dell Internet Supply
Chain Model

• The success of Dell business model is due to its
  ability to fully integrate its supply chain and
  also sell directly to its customers via internet.
• Dells build-to-order business model is made
  possible due to its just-in-time and flexible
  manufacturing operation. Every computer system
  the company makes already has a waiting customer,
  resulting in ultra low inventory level and
  favorable cash conversion cycle.

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Dell Internet Driven Supply Chain Structure

• Customers order information are rapidly relayed
  to all entities that have part to play in the
  manufacturing and delivery of goods to the
  customer. As shown below, all the relevant
  business entities are electronically linked for
  real-time information sharing.

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Synchronized Planning

• Collaborative planning allows for accurate
  forecasting on-time replenishment
• Joint design and product development
• Virtual Resources
• Reduces time for new product to get to market
• Reduces administration cost
• Create new products
• New markets penetration
• Higher production efficiency among partners
• Inventory Control
• Better asset and resource utilization
• Efficient capital investment

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Information Integration

• Information sharing transparency
• Direct real-time accessibility
• Reduced bullwhip effect
• Early problem detection
• Faster response
• Trust building
• Direct customer relationship
• On-time delivery
• Faster response time for service
• Faster access to resources
• Ease of customization

13
Dell Supply Chain Enabling Systems

• Dell integrates its Supply Chain with the best
  of breed Information technology that allow
  seamless information sharing among all partners

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What Makes Dell Run What Makes Dell Run What Makes Dell Run
Supply chain solution Product Vendor
Supply chain planning TradeMatrix Supply Chain Planner, Trade Matrix Buy Solution i2
Factory scheduling TradeMatrix Supply Chain Planner, Rhythem Collaboration Planner i2
Demand fulfillment and hub collaboration Collaborative Planner i2
Procurement Ariba Buyer Ariba
Collaborative Manufacturing/product lifecycle management Agile Anywhere Agile Software
Supplier relationship management CAPS PartMiner
Electronic catalog Free Trade Zone PartMiner
Supply chain execution Dashboard V3 Systems
Reverse logistics Network Repair Logistics WorldChain
Supply chain event management Viewlocity Viewlocity
Enterprise application integration webMethods webMethods
Financial application Oracle Financials Oracle
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Workflow Coordination

• Automated business processes
• E-Procurement
• Requisition
• Efficiency accuracy gains
• Fast response
• Improved services
• Expanded network

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Dell Internet Driven Supply ChainA Source Of
Competitive Advantage ?(1)
http//www.etforecasts.com/products/ES_pcww1203.ht
m1.1
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Dell Internet Driven Supply ChainA Source Of
Competitive Advantage ?(2)

• Build-To-Order
• Direct sales model
• Fast Cash conversion cycle
• Suppliers own manage inventory

http//www.etforecasts.com/products/ES_pcww1203.ht
m1.1
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THE END
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References
http//www.intel.com/ebusiness/pdf/affiliates/i2-d
ell.pdf http//www-2.cs.cmu.edu/weiy/e-supply.h
tm http//www.crito.uci.edu/GIT/publications/pdf
/dell_ecom_case_6-13-01.pdf http//www.etforecasts
.com/products/ES_pcww1203.htm1.1 http//www.carol
.gilbert.name/Files/SupplierSample.pdf http//info
world.com/article/04/10/18/HNpcgrowth_1.html Turba
n, Efraim, King, David, Lee Jae, Viehland,
Dennis. Electronic Commerce A Managerial
Perspective 2004. Pg. 298-332.